The value of Americans' homes rose just over $400 billion, a 2 percent gain. And checking account balances, pensions plan assets and retirement savings, such as 401(k)s, also increased.

Strong wealth gains tend to trigger more consumer spending, a critical fuel for economic growth. Higher household net worth is one reason economists have forecast that the U.S. economy will accelerate later this year.

Household wealth, or net worth, reflects the value of homes, stocks, bank accounts and other assets minus mortgages, credit cards and other debts.

Last year, home prices nationwide rose by the most in eight years. And the Standard & Poor's 500 index (^GPSC) of large stocks jumped 32 percent. So far this year, home-price gains have slowed, and the S&P 500 has risen just 1.4 percent.

Rising home prices are helping people rebuild ownership stakes in their homes. The equity that Americans as a whole have in their homes has reached 51.7 percent, the highest point since before the recession began. That's up from a record low of 36.5 percent in the first three months of 2009.

The Great Recession hammered Americans' net worth, cutting their overall wealth to $55.6 trillion in the first quarter of 2009. That was 19 percent below the pre-recession peak of $68.8 trillion.

U.S. wealth has since recovered. But households haven't benefited equally. Much of the rebound stems from stock market gains.

Yet roughly 10 percent of households own about 80 percent of stocks. Most middle-class wealth stems from home ownership, and house prices nationwide remain below the peak reached in the spring of 2006.

The Fed's figures aren't inflation-adjusted and don't account for population growth.

Last month, economists at Ohio State University adjusted for both factors and concluded that, as of mid-2013, the net worth of the average U.S. household is still 14 percent below the pre-recession peak.

Still, rising wealth and an improving economy are encouraging more Americans to take on debt, which can be a sign of confidence. Total household debt ticked up 0.4 percent in the quarter, mostly because Americans took out more auto and student loans.

But that doesn't mean consumers are returning to pre-recession habits of building up excessive debt. Mortgage debt fell last quarter, as it has in almost every quarter for the past five years.

And after-tax income is ticking up, making it easier for Americans to finance their debts. Total household debt as a percentage of income was largely flat in the fourth quarter compared with the previous three months, at 109 percent. But that's down from a peak of 135 percent at the end of 2007, just before the recession.

The gross domestic product measures the level of economic activity within a country. To figure the number, the Bureau of Economic Analysis combines the total consumption of goods and services by private individuals and businesses; the total investment in capital for producing goods and services; the total amount spent and consumed by federal, state, and local government entities; and total net exports. It's important, because it serves as the primary gauge of whether the economy is growing or not. Most economists define a recession as two or more consecutive quarters of shrinking GDP.

The CPI measures current price levels for the goods and services that Americans buy. The Bureau of Labor Statistics collects price data on a basket of different items, ranging from necessities like food, clothing and housing to more discretionary expenses like eating out and entertainment. The resulting figure is then compared to those of previous months to determine the inflation rate, which is used in a variety of ways, including cost-of-living increases for Social Security and other government benefits.

The unemployment rate measures the percentage of workers within the total labor force who don't have a job, but who have looked for work in the past four weeks, and who are available to work. Those temporarily laid off from their jobs are also included as unemployed. Yet as critical as the figure is as a measure of how many people are out of work and therefore suffering financial hardship from a lack of a paycheck, one key item to note about the unemployment rate is that the number does not reflect workers who have stopped looking for work entirely. It's therefore important to look beyond the headline numbers to see whether the overall workforce is growing or shrinking.

The trade deficit measures the difference between the value of a nation's imported and exported goods. When exports exceed imports, a country runs a trade surplus. But in the U.S., imports have exceeded exports consistently for decades. The figure is important as a measure of U.S. competitiveness in the global market, as well as the nation's dependence on foreign countries.

Each month, the Bureau of Economic Analysis measures changes in the total amount of income that the U.S. population earns, as well as the total amount they spend on goods and services. But there's a reason we've combined them on one slide: In addition to being useful statistics separately for gauging Americans' earning power and spending activity, looking at those numbers in combination gives you a sense of how much people are saving for their future.

Consumers play a vital role in powering the overall economy, and so measures of how confident they are about the economy's prospects are important in predicting its future health. The Conference Board does a survey asking consumers to give their assessment of both current and future economic conditions, with questions about business and employment conditions as well as expected future family income.

The health of the housing market is closely tied to the overall direction of the broader economy. The S&P/Case-Shiller Home Price Index, named for economists Karl Case and Robert Shiller, provides a way to measure home prices, allowing comparisons not just across time but also among different markets in cities and regions of the nation. The number is important not just to home builders and home buyers, but to the millions of people with jobs related to housing and construction.

Most economic data provides a backward-looking view of what has already happened to the economy. But the Conference Board's Leading Economic Index attempts to gauge the future. To do so, the index looks at data on employment, manufacturing, home construction, consumer sentiment, and the stock and bond markets to put together a complete picture of expected economic conditions ahead.

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3 Comments

and ah, like how many standard deviations does that cover? at this point I think the US has a few hundred billionaires, a hundred thousand millionaires, and everyone else is selling pencils, apples, or their daughters on the street corners.

I will grant you that, but that is only because home values have been steadily declining since the onset of this Depression. Last year, my home actually increased 3% in value which is the first time during those eight miserable years that I actually seen any such increase. So is this something to crack open the champagne bottle about?